How to buy a home in Germany

Although Germany has relatively low home ownership with around 48% of homes owned, it is considered an interesting investment opportunity due to the stability of the property market. Compared to its neighboring country Switzerland, Germany is much less heavily regulated and offers foreigners interesting options to buy property.

Buying as a foreigner

There are no restrictions to buying property in Germany as a foreigner. Regardless if you live there or elsewhere, it is possible for foreigners to invest into the property market in Germany and rent out the property as a lucrative investment. While renting out property is a lucrative business, rental contracts are structured in favor or tenants, meaning landlords have strict obligations to fulfill towards tenants.

Taxes & costs for home buyers

Regardless of where you are buying property, buying is never purely a matter of the asking price and generally comes with some sort of taxation attached. Germany is no different with accumulated “purchase fees” amounting to around 15% of the asking price. Here is a breakdown of these fees :

Notary & land registration

Purchase contracts between the parties must be verified and signed in presence of a notary, who will also record the land sale with the registry. Fees for the notary may vary but could be estimated at around 2% of the sales price.

Estate Agent Fees / Commission

If you are using a real estate agent to source a property for you, there may be fees charged, which in most cases may range in between 3% to 8% of the sales price. Since December 2020, it has been a legal requirement for the seller and the buyer to split the estate agent’s fee equally between them. This means the Seller will always pay at least a minimum of 50% of the total commission.

Property transfer tax (Grunderwerbsteuer)

Once the deal is finalized, the buyer will receive an invoice from the government to pay property tax on the recently acquired property. The rates are based as a percentage of the registered sales price and vary from state to state :

StateTax Rate
Bavaria & Saxony3.5%
Baden-Württemberg, Bremen, Lower Saxony, Rhineland-Palatinate & Saxony Anhalt5%
Berlin, Hesse & Mecklenburg-Vorpommern6%
Brandenburg, North Rhine-Westphalia, Saarland, Schleswig-Holstein & Thuringia6.5%

Property assessment

If the property is worth more than EUR 500,000, then a buyer may also have to assess the property by a third party. There are various ways to do this and fees may range anywhere between EUR 100 to several thousand Euros.

Property tax (Grundsteuer)

This tax varies from municipality to municipality and is paid directly to the local tax office (Finanzamt). It is an annual tax calculated as a percentage of your assessed property value and may be anywhere between 0.26% to 1%.